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THE FRAMEWORK OF INVESTMENT INCENTIVES PROGRAM IN TURKEY
The investment incentives program, which will be effective from the 1st January 2012 comprises 4 different schemes:
1- General Investment Incentive Scheme 2- Regional Investment Incentive Scheme 3- Priority Investment Incentive Scheme 4- Strategic Investment Incentive Scheme
The support measures to be provided within the frame of those schemes are summarized in the table below:
| Support Measures | General Investment Incentive Scheme | Regional Investment Incentive Scheme | Priority Investment Incentive Scheme | Strategic Investment Incentive Scheme |
| VAT Exemption | + | + | + | + |
| Customs Duty Exemption | + | + | + | + |
| Tax Deduction | + | + | + | |
| Social Security Premium Support (Employer’s Share) | + | + | + | |
| Income Tax Withholding Support * | + | + | + | + |
| Social Security Premium Support (Employee’s Share) * | + | + | + | |
| Interest/Profit Share Support ** | + | + | + | |
| Land Allocation | + | + | + | |
| VAT Refund*** | + |
* Provided that the investment is made in the Region 6 and the strategic investments supported within the Technology Focused Industry Movement Program (TFIMP).
** Provided that the investment is made in the Regions 3, 4, 5 or 6 within the frame of the Regional Investment Incentive Scheme.
*** For Strategic Investments with a minimum fixed investment amount of 500 million TL. Building- construction expenditures for all investments with incentive certificates to be made in the manufacturing sector in 2017-2021 can also benefit from VAT refund.
THE SUPPORT MEASURES
VAT Exemption:
In accordance with the measure, VAT is not paid for imported and/or locally provided investment machinery and equipment as well as selling and renting of intangible rights and software within the scope of the investment encouragement certificate.
Customs Duty Exemption:
Customs duty is not paid for the machinery and equipment provided from abroad (imported) within the scope of the investment incentive certificate.
Tax Deduction:
Calculation of income or corporate tax with reduced rates until the total value reaches to the amount of contribution to the investment according to envisaged rate of contribution.
Social Security Premium Support (Employer’s Share):
The measure stipulates that for the additional employment created by the investment, employer’s share of social security premium on portions of labor wages corresponding to amount of legal minimum wage, will be covered by the Ministry.
Income Tax Withholding Allowance:
The measure stipulates that the income tax regarding the additional employment generated by the investment within the scope of the investment encouragement certificate will not be liable to withholding. The measure is applicable only for the investments to be made in Region 6 and the strategic investments supported under the TFIMP within the scope of an investment incentive certificate.
Social Security Premium Support (Employee’s Share):
The measure stipulates that for the additional employment created by the investment, employee’s share of social security premium on portions of labor wages corresponding to amount of legal minimum wage, will be covered by the Ministry. The measure is applicable only for the investments to be made in Region 6 and the strategic investments supported under the TFIMP within the scope of an investment incentive certificate.
Interest/Profit Share Support:
Interest/Profit share support, is a financial support instrument, provided for the loans with a term of at least one year obtained within the frame of the investment encouragement certificate. The measure stipulates that a certain portion of the interest/profit share regarding the loan equivalent of at most 70% of the fixed investment amount registered in the certificate will be covered by the Ministry.
Land Allocation:
Refers to allocation of land to the investments with Investment Incentive Certificates, if any in that province in accordance with the rules and principles determined by the Ministry of Finance.
VAT Refund:1
For 2017-2021, VAT collected on the building & construction expenses of manufacturing sector investments with incentive certificate will be rebated.
VAT collected on the building & construction expenses made within the frame of strategic investments with a fixed investment amount of 500 million TL will be rebated.
Effective until 31 December 2020, the following Regional Map and Table of Provinces show classification of provinces for the implementation purpose of the Investment Incentives
| Region 1 Provinces | Region 2 Provinces | Region 3 Provinces | Region 4 Provinces | Region 5 Provinces | Region 6 Provinces |
| Ankara | Adana | Balıkesir | Afyonkarahisar | Adıyaman | Ağrı |
| Antalya | Aydın | Bilecik | Amasya | Aksaray | Ardahan |
| Bursa | Bolu | Burdur | Artvin | Bayburt | Batman |
| Eskişehir | Çanakkale | Gaziantep | Bartın | Çankırı | Bingöl |
| İstanbul | Denizli | Karabük | Çorum | Erzurum | Bitlis |
| İzmir | Edirne | Karaman | Düzce | Giresun | Diyarbakır |
| Kocaeli | Isparta | Manisa | Elazığ | Gümüşhane | Hakkâri |
| Muğla | Kayseri | Mersin | Erzincan | Kahramanmaraş | Iğdır |
| Kırklareli | Samsun | Hatay | Kilis | Kars | |
| Konya | Trabzon | Kastamonu | Niğde | Mardin | |
| Sakarya | Uşak | Kırıkkale | Ordu | Muş | |
| Tekirdağ | Zonguldak | Kırşehir | Osmaniye | Siirt | |
| Yalova | Kütahya | Sinop | Şanlıurfa | ||
| Malatya | Tokat | Şırnak | |||
| Nevşehir | Tunceli | Van | |||
| Rize | Yozgat | ||||
| Sivas | |||||
| 8 PROVINCES | 13 PROVINCES | 12 PROVINCES | 17 PROVINCES | 16 PROVINCES | 15 PROVINCES |
Effective from 1 January 2021, the following Regional Map and Table of Provinces show classification of provinces for the implementation purpose of the Investment Incentives Program
| Region 1 Provinces | Region 2 Provinces | Region 3 Provinces | Region 4 Provinces | Region 5 Provinces | Region 6 Provinces |
| Ankara | Aydın | Adana | Afyonkarahisar | Bayburt | Adıyaman |
| Antalya | Balıkesir | Burdur | Aksaray | Çankırı | Ağrı |
| Bursa | Bilecik | Düzce | Amasya | Erzurum | Ardahan |
| Eskişehir | Bolu | Gaziantep | Artvin | Giresun | Batman |
| İstanbul | Çanakkale | Karaman | Bartın | Gümüşhane | Bingöl |
| İzmir | Denizli | Kırıkkale | Çorum | Kahramanmaraş | Bitlis |
| Kocaeli | Edirne | Kütahya | Elâzığ | Kilis | Diyarbakır |
| Muğla | Isparta | Mersin | Erzincan | Niğde | Hakkâri |
| Tekirdağ | Karabük | Samsun | Hatay | Ordu | Iğdır |
| Kayseri | Trabzon | Kastamonu | Osmaniye | Kars | |
| Kırklareli | Rize | Kırşehir | Sinop | Mardin | |
| Konya | Uşak | Malatya | Tokat | Muş | |
| Manisa | Zonguldak | Nevşehir | Tunceli | Siirt | |
| Sakarya | Sivas | Yozgat | Şanlıurfa | ||
| Yalova | Şırnak | ||||
| Van | |||||
| 9 PROVINCES | 15 PROVINCES | 13 PROVINCES | 14 PROVINCES | 14 PROVINCES | 16 PROVINCES |
GENERAL INVESTMENT INCENTIVES SCHEME
Regardless of in which Region an investment is made all projects which meet conditions of specific capacity and the following minimum fixed investment amount will be supported within the frame of the General Investment Incentives Scheme. Investment subjects which are excluded from the investment incentives program can not benefit from this scheme.
The amount of minimum fixed investment is 1 million TL in Region 1 and 2 and 500 thousand TL in Regions 3, 4, 5 and 6.
REGIONAL INVESTMENT INCENTIVES SCHEME
The sectors to be supported in each province are determined in accordance with potentials of the provinces and the economies of scale and the intensity of the supports are differentiated in line with the development level of the regions.
The amount of minimum fixed investment is defined separately for each sector and each region, the lowest amount being 1 million TL in Regions 1 and 2, and 500 thousand TL in the remaining Regions.
The terms and rates of supports within the Regional Investment Incentives Scheme are summarized in the Table below:
REGIONAL INVESTMENTS INCENTIVE SCHEME MEASURES
| INCENTIVE MEASURES | REGIONS | ||||||||
| I | II | III | IV | V | VI | ||||
| VAT Exemption | YES | YES | YES | YES | YES | YES | |||
| Customs Duty Exemption | YES | YES | YES | YES | YES | YES | |||
| Tax Deduction* | Rate of Contribution to Investment* (%) | Out of OIZ or IZ | 15 | 20 | 25 | 30 | 40 | 50 | |
| Within OIZ or IZ | 20 | 25 | 30 | 40 | 50 | 55 | |||
| Social Security Premium Support (Employer’s Share)** | Support Period | Out of OIZ or IZ | 2 years | 3 years | 5 years | 6 years | 7 years | 10 years | |
| Within OIZ or IZ | 3 years | 5 years | 6 years | 7 years | 10 years | 12 years | |||
| Land Allocation | YES | YES | YES | YES | YES | YES | |||
| Interest/ Profit Share Support | Local Loans | – | – | 3 Points | 4 Points | 5 Points | 7 Points | ||
| Foreign Exchange/ FX denominated loans | 1 Point | 1 Point | 2 Points | 2 Points | |||||
| Social Security Premium Support (Employee’s Share) | – | – | – | – | – | 10 years | |||
| Income Tax Withholding Support | – | – | – | – | – | 10 years | |||
OIZ: Organized Industrial Zones
IZ: Manufacturing Investments in Specialized Industrial Zones
*Within the scope of incentive certificates issued for manufacturing sector (US-97 Code: 15-37); Rate of contribution to investment for each region shall get 15 points additionaly and tax deduction rate for each region shall be applied as 100 per cent for the investment expenditures that would be realized between the dates of 1/1/2017 and 31/12/2022.
** If requested during the application phase regarding the issuance of incentive certificates, the ratio of the support to the fixed investment amount is increased by half of the investment contribution rate, provided that the tax reduction is not utilized.
PRIORITY INVESTMENTS INCENTIVE SCHEME
The following investment subjects have been designated as priority investments within the framework of our country’s requirements and these investments are supported by measures of Region 5 even if they are made in Regions 1, 2, 3 and 4.
- Tourism investments in Cultural and Touristic Preservation and Development Regions and thermal tourism investments,
- Mining investments,
- Railroad, maritime and airline transportation investments,
- Defense industry investments,
- Test center investments for products in the medium-high and high-tech industry class according to the technology density definition of the Organization for Economic Cooperation and Development (OECD).Nursery, Preschool, Primary, Middle and High School and education investments for the use, repair and maintenance of air vehicles
- Investments made to manufacture the products and parts designed and developed as an outcome of the R&D Projects supported by the Ministry of Science, Industry and Technology, TUBITAK and KOSGEB,
- Motorized land vehicles key industry investments with a minimum investment amount of 300 million TL, automotive engine manufacturing investments with a minimum amount of 75 million TL and transmission components/parts and automotive electronics manufacturing investments,
- Investments made to generate electricity from coal,
- Investments made to generate electricity through waste heat recovery in a facility,
- Energy efficiency investments made in existing manufacturing facilities,
- Liquefied natural gas (LNG) investments and underground gas storage investments with a minimum amount of 50 million TL,
- Investments of carbon fiber or the composite materials made from carbon fiber provided that along with carbon fiber production.
- Investments made to manufacture high-technology products classified according to OECD technology intensive definition.
- Investments made to explore mines in the permitted fields for the investors holding Mining License and Certificate.
- Investments made to manufacture turbines and generators for renewable energy and wind turbine wings for wind power.
- Integrated investments for aluminium flat products using direct chill slab casting and hot rolling methods.
- Licensed warehousing investments.
- Nuclear power plant investments.
- Qualified laboratory investments
- Greenhouse investments based on automation with a minimum of 5 million TL, 25 decares and domestic spare parts
- Investments subject to Environmental License within the scope of Environmental Permit and License Regulation. Elderly and Disabled care centers and wellness investments
- Medium-high technology investments amounting to a minimum 500 million TL
- Investments in the production of software and information products to be made in specialized free zones without requiring a minimum investment amount.
PRIORITY INVESTMENTS INCENTIVE SCHEME MEASURES
| INCENTIVE MEASURES | Terms and Rates of Supports* | |
| VAT Exemption | YES | |
| Customs Duty Exemption | YES | |
| Tax Deduction | Rate of Contribution to Investment (%) | 40** |
| Tax Deduciton (%) | 80** | |
| Social Security Premium Support (Employer’s Share) | 7 years | |
| Land Allocation | YES | |
| Interest/ Profit Share Support | Local Loans | 5 points |
| Foreign Exchange/ FX denominated loans | 2 points |
- Supports of Region 5 for the Investments that are made in Regions 1-5; Supports of Region 6 for the Investments that are made in Region 6
**Within the scope of incentive certificates issued for manufacturing sector (US-97 Code: 15-37); Rate of contribution to investment shall get 15 points additionaly and tax deduction rate shall be applied as 100 per cent for the investment expenditures that would be realized between the dates of 1/1/2017 and 31/12/2022.
STRATEGIC INVESTMENT INCENTIVE SCHEME
The Goals:
- On the basis of the “Input Supply Strategy”, this scheme aims at supporting production of intermediate and final products with high import dependence with a view to reduce current account deficit.
- It also targets encouraging high-tech and high value added investments with a potential of strengthening Turkey’s international competitiveness.
Investments meeting the criteria below are supported within the frame of the Strategic Investment Incentive Scheme:
- to be made for production of intermediate and final goods with high import dependence of which more than 50% of these goods are supplied by imports,
- to have a minimum investment amount of 50 million TL,
- to create minimum 40% value added (This condition is not applicable to refined petroleum production investments and petrochemicals production investments),
- to have an import amount of at least $50 million for goods to be produced in the last one year period (This condition is not applicable to goods with no domestic production)
The investments approved by the Ministry within the Technology Focused Industry Movement Program (TFIMP) also be supported within the context of strategic investments.
STRATEGIC INVESTMENTS INCENTIVE SCHEME MEASURES
| INCENTIVE MEASURES | REGIONS | ||||
| I | II | III | IV | V | VI |
| VAT Exemption | YES | ||||
| Customs Duty Exemption | YES | ||||
| Tax Deduction* | Rate of Contribution to Investment* (%) | 50 | |||
| Social Security Premium Support (Employer’s Share) | Support Period | 7 Years (10 years for 6th region) | |||
| Land Allocation | YES | ||||
| Interest/Profit Share Support | Local Loans | 5 points (under the TFIMP 10 points for high-tech products, 8 points for others) | |||
| Foreign Exchange/ FX denominated loans | 2 points | ||||
| Social Security Premium Support (Employee’s Share) | 10 years (only for investments in the Region 6 and strategic investments supported under TFIMP) | ||||
| Income Tax Withholding Support ** | 10 years (only for investments in the Region 6 and in other regions under the TFIMP: 7 years in high-tech products, others for 5 years) | ||||
| VAT Refund | YES (only for the expenditures of building for investments over 500 million TL) |
*Within the scope of incentive certificates issued for manufacturing sector (US-97 Code: 15-37); Rate of contribution to investment shall get 15 points additionaly and tax deduction rate shall be applied as 100 per cent for the investment expenditures that would be realized between the dates of 1/1/2017 and 31/12/2022.
**Strategically supported investments under TFIMP, if the product is high-tech, it can be applied for a maximum of 500 employees and for others up to 300 employees.
SUB-REGIONAL INCENTIVES
Following investments will benefit from more beneficial sub-regional rates and terms for Tax Deduction and support to employer’s share of social security premium in any region:
- Investments in Organized Industrial Zones and Manufacturing Investments in Specialized Industrial Zones,
- Joint Investments by multiple (at least 5) companies operating in the same sector which establish integration to their activities.
- Selected medium-high-technology industries will benefit from terms and rates of the support measures of Region 4 even if they are made in Regions 1 (except Istanbul), 2, 3. However, in the organized industrial zones or industrial zones in Istanbul Province, the regional supports in the 1st region are applied to the investments amounting to a minimum of 5 million TL, excluding completely new investments.
- Investments to be made in the districts of the provinces of the 1st, 2nd, 3rd and 4th regions included in Annex-7 of the Decision;
- From the regional supports provided to the sub-region of the province where the district is located;
- Investments to be made in the OIZ / EZ of these districts benefit from the regional supports provided to the two sub-regions of the province where they are located.
- 5 th region provinces;
- Regional supports provided to the 6th region for the investments to be made in the districts included in ANNEX-7,
- For the investments to be made in the OIZ / EZ of these districts, Social Security Premium Support (Employee’s Share), is applied by adding two years to the period valid in the 6th region; tax deduction support is applied by adding five points to the investment contribution rate valid in 6th region.
- Within the scope of these applications, income tax withholding support and Social Security Premium Support (Employee’s Share) are not applied.
- Effective from January 1, 2021, supplement to the Decision for the districts that will benefit from sub-regional supports, ANNEX-7:
| Ankara | Çamlıdere |
| Bala | |
| Haymana | |
| Adana | Yumurtalık |
| İmamoğlu | |
| Karataş | |
| Karaisalı | |
| Tufanbeyli | |
| Aladağ | |
| Feke | |
| Saimbeyli | |
| Afyonkarahisar | Kızılören |
| İhsaniye | |
| Bayat | |
| Sinanpaşa | |
| Hocalar | |
| Çobanlar | |
| Aksaray | Ortaköy |
| Sarıyahşi | |
| Eskil | |
| Ağaçören | |
| Güzelyurt | |
| Gülağaç | |
| Amasya | Göynücek |
| Hamamözü | |
| Antalya | Gündoğmuş |
| Aydın | Kuyucak |
| Germencik | |
| Karacasu | |
| Sultanhisar | |
| Köşk | |
| Buharkent | |
| Yenipazar | |
| İncirliova | |
| Bozdoğan | |
| Koçarlı | |
| Karpuzlu | |
| Balıkesir | Savaştepe |
| Dursunbey | |
| Sındırgı | |
| Havran | |
| Kepsut | |
| İvrindi | |
| Balya | |
| Bartın | Kurucaşile |
| Bilecik | Gölpazarı |
| İnhisar | |
| Yenipazar | |
| Bolu | Yeniçağa |
| Mudurnu | |
| Göynük | |
| Seben | |
| Kıbrısçık | |
| Dörtdivan | |
| Burdur | Kemer |
| Ağlasun | |
| Cavdır | |
| Çeltikçi | |
| Yeşilova | |
| Altınyayla | |
| Bursa | Harmancık |
| Keles | |
| Büyükorhan | |
| Çanakkale | Bayramiç |
| Yenice | |
| Çankırı | Bayramören |
| Çorum | Ortaköy |
| Boğazkale | |
| Uğurludağ | |
| Mecitözü | |
| Bayat | |
| Laçin | |
| Denizli | Babadağ |
| Kale | |
| Beyağaç | |
| Baklan | |
| Güney | |
| Çameli | |
| Düzce | Çilimli |
| Kaynaşlı | |
| Cumayeri | |
| Gölyaka | |
| Yığılca | |
| Edirne | Enez |
| İpsala | |
| Meriç | |
| Lalapaşa | |
| Elazığ | Kovancılar |
| Karakocan | |
| Alacakaya | |
| Maden | |
| Palu | |
| Baskil | |
| Sivrice | |
| Arıcak | |
| Erzincan | Otlukbeli |
| Tercan | |
| Çayırlı | |
| Erzurum | Horasan |
| Hınıs | |
| Şenkaya | |
| Çat | |
| Köprüköy | |
| Tekman | |
| Karaçoban | |
| Karayazı | |
| Eskişehir | Alpu |
| Günyüzü | |
| Han | |
| Gaziantep | Nizip |
| İslahiye | |
| Oğuzeli | |
| Nurdağı | |
| Karkamış | |
| Araban | |
| Yavuzeli | |
| Hatay | Arsuz |
| Reyhanlı | |
| Yayladağı | |
| Hassa | |
| Kumlu | |
| Altınözü | |
| Isparta | Şarkikaraağaç |
| Aksu | |
| Gelendost | |
| Sütçüler | |
| İzmir | Bayındır |
| Beydağ | |
| Kiraz | |
| Karabük | Eskipazar |
| Yenice | |
| Ovacık | |
| Eflani | |
| Karaman | Kazımkarabekir |
| Başyayla | |
| Sarıveliler | |
| Ayrancı | |
| Kastamonu | Daday |
| Cide | |
| İhsangazi | |
| Hanönü | |
| Azdavay | |
| Pınarbaşı | |
| Şenpazar | |
| Doğanyurt | |
| Kayseri | İncesu |
| Felahiye | |
| Yahyalı | |
| Bunyan | |
| Yeşilhisar | |
| Pınarbaşı | |
| Sarıoğlan | |
| Tomarza | |
| Sarız | |
| Akkışla | |
| Kırıkkale | Karakeçili |
| Delice | |
| Keskin | |
| Sulakyurt | |
| Balışeyh | |
| Celebi | |
| Kırklareli | Demirköy |
| Pehlivanköy | |
| Kofçaz | |
| Kırşehir | Akpınar |
| Çiçekdağı | |
| Boztepe | |
| Akçakent | |
| Kilis | Musabeyli |
| Polateli | |
| Konya | Kulu |
| Sarayönü | |
| Hadim | |
| Taşkent | |
| Güneysınır | |
| Hüyük | |
| Kadınhanı | |
| Doğanhisar | |
| Tuzlukçu | |
| Yalıhüyük | |
| Bozkır | |
| Derebucak | |
| Altınekin | |
| Çeltik | |
| Yunak | |
| Derbent | |
| Halkapınar | |
| Emirgazi | |
| Ahırlı | |
| Kütahya | Domaniç |
| Hisarcık | |
| Şaphane | |
| Pazarlar | |
| Dumlupınar | |
| Altıntaş | |
| Çavdarhisar | |
| Aslanapa | |
| Malatya | Hekimhan |
| Doğanşehir | |
| Akçadağ | |
| Yazıhan | |
| Doğanyol | |
| Arguvan | |
| Kuluncak | |
| Kale | |
| Pütürge | |
| Manisa | Saruhanlı |
| Köprübaşı | |
| Ahmetli | |
| Gölmarmara | |
| Selendi | |
| Mersin | Aydıncık |
| Mut | |
| Gülnar | |
| Muğla | Seydikemer |
| Nevşehir | Derinkuyu |
| Acıgöl | |
| Niğde | Altunhisar |
| Çiftlik | |
| Osmaniye | Sumbas |
| Rize | Hemşin |
| Güneysu | |
| İyidere | |
| Derepazarı | |
| İkizdere | |
| Kalkandere | |
| Çamlıhemşin | |
| Sakarya | Kaynarca |
| Ferizli | |
| Karapürçek | |
| Taraklı | |
| Samsun | Kavak |
| Havza | |
| Alacam | |
| Yakakent | |
| Vezirköprü | |
| Salıpazarı | |
| Asarcık | |
| Ayvacık | |
| Sinop | Dikmen |
| Sivas | Akıncılar |
| Zara | |
| Gölova | |
| Kangal | |
| Ulaş | |
| Altınyayla | |
| Hafik | |
| Yıldızeli | |
| Koyulhisar | |
| Trabzon | Çarşıbaşı |
| Araklı | |
| Şalpazarı | |
| Dernekpazarı | |
| Tonya | |
| Köprübaşı | |
| Hayrat | |
| Düzköy | |
| Uşak | Banaz |
| Karahallı | |
| Sivaslı | |
| Yozgat | Aydıncık |
| Zonguldak | Kilimli |
| Gökçebey |